Car Owners Are Being Literally Driven to the Financial Brink

Promo image. Loans are easy and cheap!

23 million Americans have subprime car loans and 6.3 million are behind on their payments. That's Freedom!

Cars are such a disaster for our cities that Uber is trying to fly over them while Musk is trying to drill under them. Yet every time I complain about the dumbness of it all, having cars clog up the roads when there are sensible alternatives, I get comments like "cars= freedom!" and "For most people, cars are the most convenient option. Until a realistic alternative exists for a larger number of Americans, we will continue to see reliance on autos."

And most of them have no choice because there are no alternatives. They also need car loans to pay for those cars, and are apparently having trouble keeping up with them. According to Heather Long in the Washington Post,

Debt in America

Federal Reserve New York /Public Domain

There are 6.3 million Americans who are 90 days late — or more — on their auto loan payments, an increase of about 400,000 from a year ago. When someone gets so far behind on their payments, they typically end up losing their vehicle.
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ad for car loans /Screen capture

Many having trouble have bad credit, and are deep into subprime loans with interest rates as high as 20 percent.

Some have started to compare what's happening in the auto loan market to the home mortgage crisis that helped trigger the Great Recession and financial crisis of 2008-2009. Many of the same issues are back: Lenders appear to have lowered their standards to give people car loans who probably should not qualify or should not be getting such a large loan. A man in Alabama was able to use his shotgun to cover most of the down payment.

On the Federal Reserve Bank of New York Blog, they describe the scale of the loans:

Outstanding subprime auto debt (classified in the chart below as debt held by borrowers with origination credit scores under 620) now stands at about $300 billion....Since 2011, the overall delinquency rate of loans originated by auto finance companies has significantly deteriorated.
increasing debt

Federal Reserve New York /Public Domain

So here we are, loading expensive debt on to people who have no other choice because that is how the USA works, because people are so car dependent.

Although the impact on the larger financial sector may be muted, there are over 23 million consumers who hold subprime auto loans. These consumers may find their credit reports further damaged after a default or encounter further financial difficulties after experiencing a car repossession.
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Loan ad for bad credit customers/Screen capture

Imagine. Cars=Freedom! In fact, they are a millstone that costs people ten to fifteen thousand dollars per year and perhaps their credit rating if they can't keep up. Yet the country is full of places where there are no alternatives thanks to crappy or nonexistent transit, lousy bike infrastructure, and low densities.

Meanwhile, the Republican tax plan makes it even harder to find an alternative to driving; it keeps a $255 per month subsidy for car parking but eliminates the $20 per month tax benefit for cyclists who commute. According to Newsweek,

“It’s hard to see [this] as anything other than an attack on cities and the people who live there,” said Steven Higashide, director of research at TransitCenter, a foundation focused on the future of mobility. “The enormous parking benefit means we’re incentivizing people to drive into our most congested downtowns, while disincentivizing environmentally-friendly and space-efficient modes of transport.”

It's almost like they want people to drive.

UPDATE: Headline changed thanks to clever tweet from